VenturesNow

Kenya is now the cheapest country to purchase diesel in Eastern Africa

Published

2 years ago

March 11, 2022

Africa News Watch

Kenya is now the cheapest country to purchase diesel in Eastern Africa

Culled from Businessdailyafrica

By John Mutua

SUMMARY

A litre of the commodity costs Sh112.63 on average in Kenya, compared to Sh118.44, Sh139.08 and Sh149.91 in three of the six East African Community countries, Tanzania, Uganda and Burundi, respectively.
This bucks a trend where Kenya has had the costliest super petrol and diesel in the region mainly due to relatively high taxes and levies.
The shift in the market structure is linked to the introduction of monthly subsidies in Kenya, which cut the current diesel prices by Sh23.29 a litre.

Diesel prices in Kenya are the lowest in eastern Africa in the wake of the monthly subsidy, reversing the market structure that made the country’s fuel the most costly in the region.

A litre of the commodity costs Sh112.63 on average in Kenya, compared to Sh118.44, Sh139.08 and Sh149.91 in three of the six East African Community countries, Tanzania, Uganda and Burundi, respectively.

This bucks a trend where Kenya has had the costliest super petrol and diesel in the region mainly due to relatively high taxes and levies, which encourage local motorists in border towns to fuel in the neighbouring countries.

The shift in the market structure is linked to the introduction of monthly subsidies in Kenya, which cut the current diesel prices by Sh23.29 a litre.

“The big difference is mainly attributed to the subsidy that the government has been using,” said an official at the Energy and Petroleum Regulatory Authority (Epra).

Kenya introduced the subsidy on April 14 last year as part of efforts to defuse simmering public anger over the high cost of basic items.

The subsidy has kept pump prices unchanged for the fourth month in a row despite a jump in the cost of shipping the refined fuel.

It is supported by billions of shillings raised from fuel consumers through the petroleum development levy, which was increased to Sh5.40 a litre in July 2020 from Sh0.40, a 1,250 percent rise.

The fund cushions consumers from volatility in fuel prices but has also seen motorists lose out when paying the Sh5.40 for a litre at the pump.

Tanzania is the only country in the region with cheaper super petrol than Kenya, according to the pricing list on GlobalPetrolPrices.com — a site that tracks fuel prices globally.

A litre of super petrol is averaging Sh131.63 in Kenya while in Tanzania it is going for Sh125.2. Uganda has the costliest super petrol in the region at Sh158.1 per litre followed by Burundi at Sh152.85.

In September last year, Kenya had the most expensive super petrol in the region at Sh134.72 per litre, while the commodity retailed at Sh131 in Uganda. It was the cheapest in Tanzania at Sh115.26. The relatively high cost in Kenya was linked to taxes and levies.

There are seven levies and two taxes that Epra takes into account when setting fuel prices, which have been blamed for the high cost of petroleum products. The levies accounted for nearly half of current petrol costs, shifting the spotlight to taxation of petroleum products.

Tanzania scrapped a Sh4.90 ($0.043) levy charged per litre of fuel in a bid to lower fuel prices from the start of this month.

Kenya’s fuel subsidy has been crippled in the wake of the Russia-Ukraine war that pushed crude oil prices to levels seen more than 10 years ago.

Government sources say the Treasury will struggle to pay oil marketers more than Sh25 billion over the next two months to keep pump prices unchanged despite a jump in the cost of shipping the commodity.

The current fuel being consumed in Kenya is based on the average crude oil prices of $82.03 a barrel, and the monthly review set for next Tuesday at $92.

Oil prices have jumped more than 30 per cent since 24 February, touching $139 a barrel at one point this week.

The oil price had fallen back to about $106 a barrel at one point on Wednesday, but by Thursday morning it was trading at around $116.

Officials at the energy regulator Epra reckon that the Treasury would require at least Sh10 billion this month and another Sh15 billion in April to compensate oil marketers and keep local pump prices unchanged.

With the fund supporting the subsidy exhausted, the Treasury will struggle to pay the marketers billions of shillings at a time when it’s faced with rising spending pressure from critical items like the August General Election and Covid-19 vaccines.

jmutua@ke.nationmedia.com

VenturesNow

Nigeria’s antigraft agency EFCC may try 300 forex racketeers

Published

2 days ago

April 24, 2024

Ifeoluwa Dada

The Economic and Financial Crimes Commission (EFCC), Nigeria’s anti-corruption body, could go after 300 forex criminals who trade on a peer-to-peer platform without following the rules.

Ola Olukoyede, the chairman of the EFCC, said this during a briefing of reporters and bureau chiefs in Abuja on Tuesday. He said that the accounts were frozen on Monday because of a court order. He said that over $15bn had been moved into one of the accounts in the last year.

The government recently blocked Binance and other crypto companies’ online sites through the Nigerian Communications Commission. This was done to stop what the government saw as ongoing manipulation of the foreign exchange market and the illegal flow of money.

Two top executives of the cryptocurrency exchange Binance were also arrested. This came as the government tried to stop people from betting on the naira by cracking down on cryptocurrency exchanges.

The government also sent EFCC agents to arrest Bureau De Change operators in Abuja’s popular Wuse Zone 4. Reports say that crypto traders now use websites like Bybit, Bitget, Kucoin, and others instead of Binance, Coinbase, and Kraken.

But Olukoyede talked about the steps being taken to protect the naira and boost the economy. He said that the fx accounts were frozen to keep the foreign exchange market safe and the economy safe.

Olukoyede said that the FX accounts were frozen to protect the economy and make sure the foreign exchange market was safe. This was one of the steps being taken to protect the naira.

He said the work had made the naira and the forex market more valuable. For the commission to work, he said, Nigerians had to back it up. If the agency failed, he said, Nigeria had failed.

Nigeria has been severely impacted by a lack of dollars, which has caused the naira to fall to all-time lows in recent weeks and led the central bank to weaken the currency twice in less than a year.

VenturesNow

Dangote refinery drops diesel price further, but the wait continues for retail consumers

Published

2 days ago

April 24, 2024

Ifeoluwa Dada

Barely weeks after crashing the prices of diesel and aviation fuel by about 30% in the country, Nigeria’s private Dangote Petroleum Refinery has again announced a further reduction in the prices of the products.

According to a statement by the organization on Tuesday, both diesel and aviation fuel will now be sold at N940 and N980 per litre respectively from Africa’s largest refinery.

Dangote says the price change of N940 applies to customers buying five million litres and above from the refinery, while the price of N970 is for customers buying one million litres and above.

Speaking on the new development, the Head of Communication, Mr Anthony Chiejina, explained that the new price aligns with the company’s commitment to cushion the effect of economic hardship in Nigeria.

“I can confirm to you that Dangote Petroleum Refinery has entered a strategic partnership with MRS Oil and Gas stations, to ensure that consumers get to buy fuel at affordable prices, in all their stations be it Lagos or Maiduguri. You can buy as low as 1 litre of diesel at N1,050 and aviation fuel at N980 at all major airports where MRS operates.”

He further stated that the partnership would be extended to other major oil marketers. “The essence of this is to ensure that retail buyers do not buy at exorbitant prices.

“The Dangote Group is committed to ensuring that Nigerians have better welfare and as such, we are happy to announce these new prices and hope that it would go a long way to cushion the effect of economic challenges in the country.

Nigerian President Bola Tinubu had also commended Mr Dangote for the initial price reduction, describing it as an “enterprising feat.”

Reacting to the latest development, The Director General of the Manufacturers Association of Nigeria (MAN), Mr Ajayi Kadiri, who recently lamented the plight of manufacturers against the backdrop of rising prices of their products, stressing that automotive gas oil (AGO) gulped over 80℅ of manufacturers’ profit, noted that “the decision of Dangote Refinery to first crash the price from about N1,750/litre to N1,200/litre, N1,000/litre and now N940 is an eloquent demonstration of the capacity of local industries to positively impact the fortunes of the national economy.”

He added, “The trickledown effect of this singular intervention promises to change the dynamics in the energy cost equation of the country, in the midst of inadequate and rising cost of electricity.

“The reduction will have far-reaching effects in critical sectors like industrial operations, transportation, logistics, and agriculture, contributing to easing the high inflation rate in the country; a lot of companies will be back in operation.”

Following recent energy failure which has seen Nigeria suffer its worst blackout in decades, the cost of alternate energy has been a towering challenge for both industrial and private consumption, with the price of diesel being a lead factor being the most option for industrial purposes.

However, Nigerians are curios about the effect of the reduction as it appears the recent gain and strength of the local currency (Naira) and cut in the price of diesel both within the last three weeks has had little or no effect on the cost of living.